June 12, 2006
Against Net Neutrality
The supporters of Net Neutrality believe that bandwidth is inherently plentiful so the only reason anyone might charge different prices for different traffic is because they are taking advantage of some local monopoly position.
This assumption of plenty was especially valid in the late 1990's when last mile bandwidth was very limited, people used the internet primarily for web surfing and email, and the Internet bubble was paying for companies to provision what seemed like huge amounts of bandwidth at the backbone.
Today however, the last mile has improved enough for people to download HD quality video to their home.... as long as not that many other people are doing so simultaneously! In other words, the era of bandwidth plenty is over. There simply is not a enough bandwidth for everyone to download their own HD quality video feed over the Internet simultaneously.
The standard answer provided by economics for dealing with the problem of demand exceeding supply is called pricing. Consumers who pay more are favored over those who pay less. So the question on the table is how do people or companies pay more for their traffic to arrive in preference to that of others.
There are four basic choices:
- Overprovisioning: You pay $1000 to ensure that you always have enough bandwidth for whatever you need. Even if most of the time, your bandwidth is idle, you still pay.
- Different classes of Internet end-users: If you pay more per month, your traffic will block someone else's. Even if you don't actually need that particular file ASAP, you still pay more.
- Recipient pays for different classes of content: You transact with a web site to download a video you want and then you transact with your ISP to decide what quality of service you want for that particular download. You suffer from having to do two transactions for every thing you want to download, you have to understand at great technical level the bandwidth requirements of the particular action you want to perform, and you have to suffer through whatever poor UI your ISP offers for this activity.
- Server pays for different classes of content: You transact with the web site to obtain the video. The web site pays your ISP for the quality of service you expect. Advertisers can subsidize your Internet use. You save money and time.
Net Neutrality is basically a prohibition on option 4. Option 4 is obviously most preferable to end users. Therefore Net Neutrality is bad.
[Update: David Isenberg responded to this post in Welcome to the Stupid Internet. I replied to his response in "Paying for Quality".
Posted by Alex at 11:40 AM | Comments (1) | TrackBack (0)
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Comments
Argh. Unfortunately, you're simply assuming that it's cheaper to account for bandwidth rather than provide more. I'm not trying to say that bandwidth is free, but instead to say that accounting is more expensive than you think it is. I also fear that there's too little competition in the broadband ISP market for pricing to work successfully.
Posted by: Russell Nelson at June 14, 2006 01:50 AM
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